UNITED STATES

                  SECURITIES AND EXCHANGE COMMISSION

                       Washington,  D.C.  20549

                               FORM 10Q

Quarterly Report Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended September 30, 1999

Commission File Number: 2-88927

                      FIRST KEYSTONE CORPORATION
        (Exact name of registrant as specified in its charter)


          Pennsylvania                               23-2249083
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                   identification No.)


111 West Front Street, Berwick, PA                      18603
(Address of principal executive offices)              (Zip Code)


Registrant's telephone number, including area code:  (717) 752-3671

   Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.

                         Yes   X     No


   Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical date:

Common Stock, $2 Par Value, 2,833,727 shares as of September 30, 1999.


<PAGE>


                    PART I. - FINANCIAL INFORMATION

Item. 1  Financial Statements

<TABLE>

                      FIRST KEYSTONE CORPORATION
                            BALANCE SHEETS
                              (Unaudited)

<CAPTION>
(Amounts in thousands, except per share data)

                                                 September     December
                                                  1999           1998
<S>                                          <C>            <C>
ASSETS
Cash and due from banks                             $  7,518       $  7,033
Interest bearing deposits with banks                       1             22
Available-for-sale securities carried
  at estimated fair value                            128,523        116,701
Investment securities, held to
  maturity securities, estimated
  fair value of $11,867 and $14,015                   12,078         13,985
Loans, net of unearned income                        180,574        161,532
Allowance for loan losses                             (2,572)        (2,421)
                                                    ________       ________
Net loans                                           $178,002       $159,111
Bank premises and equipment                            3,888          3,758
Interest receivable                                    2,327          2,133
Other assets                                           1,947            285
                                                    ________       ________
  Total Assets                                      $334,284       $303,028

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
  Non-interest bearing                              $ 21,926       $ 22,749
  Interest bearing                                   228,050        224,342
                                                    ________       ________
  Total deposits                                    $249,976       $247,091
Short-term borrowings                                 30,423          6,634
Long-term borrowings                                  22,000         13,000
Accrued expenses                                       1,865          1,521
Other liabilities                                         63          1,029
                                                    ________       ________
  Total Liabilities                                 $304,327       $269,275

STOCKHOLDERS' EQUITY
Common stock, par value $2 per
  share; authorized 10,000,000
  issued 2,933,727 shares                           $  5,867       $  5,867
Surplus                                                9,761          9,761
Retained earnings                                     19,540         17,123
Accumulated other comprehensive
  income (loss)                                       (2,114)         2,193
Less treasury stock at cost 100,000
  shares in 1999 and 35,134 shares
  in 1998                                           $ (3,097)        (1,191)
                                                    ________        _______

  Total Stockholders' Equity                        $ 29,957       $ 33,753
                                                    ________       ________
  Total Liabilities and Stockholders'
    Equity                                          $334,284       $303,028


See Accompanying Notes to Financial Statements

</TABLE>

                                  1


<PAGE>

<TABLE>

                      FIRST KEYSTONE CORPORATION
                         STATEMENTS OF INCOME
        FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                              (Unaudited)

<CAPTION>
(Amounts in thousands except per share data)

                                                  1999          1998
<S>                                            <C>            <C>
INTEREST INCOME
Interest and fees on loans                            $3,706         $3,362
Interest and dividend income
  on securities                                        2,182          1,797
Interest on deposits in banks                             12             67
                                                      ______         ______
  Total Interest Income                               $5,900         $5,226

INTEREST EXPENSE
Interest on deposits                                  $2,356         $2,304
Interest on short-term borrowings                        395             74
Interest on long-term borrowings                         279            235
                                                      ______         ______
  Total Interest Expense                              $3,030         $2,613

Net interest income                                   $2,870         $2,613
Provision for loan losses                                 50             50
                                                      ______         ______
Net Interest Income After Provision
  for Loan Losses                                     $2,820         $2,563

OTHER INCOME
Service charges on deposit accounts                   $  227         $  174
Other non-interest income                                157            224
Investment securities gains
  (losses) net                                            77             29
                                                      ______         ______
  Total Other Income                                  $  461         $  427

OTHER EXPENSES
Salaries and employee benefits                        $  884         $  710
Net occupancy and fixed asset expense                    234            256
Other non-interest expense                               470            413
                                                      ______         ______
  Total Other Expenses                                $1,588         $1,379

Income before income taxes                            $1,693         $1,611
Applicable income tax (benefit)                          338            342
                                                      ______         ______
Net Income                                            $1,355         $1,269

Net Income Per Weighted Share
  Outstanding                                         $  .47         $  .43



See Accompanying Notes to Financial Statements


</TABLE>


                                  2


<PAGE>


<TABLE>

                      FIRST KEYSTONE CORPORATION
                         STATEMENTS OF INCOME
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                              (Unaudited)

<CAPTION>
(Amounts in thousands except per share data)

                                                  1999          1998
<S>                                           <C>            <C>
INTEREST INCOME
Interest and fees on loans                           $10,728        $10,021
Interest and dividend income
  on securities                                        6,207          5,135
Interest on deposits in banks                           165             205
                                                     _______        _______
  Total Interest Income                              $17,100        $15,361

INTEREST EXPENSE
Interest on deposits                                 $ 7,082        $ 6,779
Interest on short-term borrowings                        989            212
Interest on long-term borrowings                         698            599
                                                     _______        _______
  Total Interest Expense                             $ 8,769        $ 7,590

Net interest income                                  $ 8,331        $ 7,771
Provision for loan losses                                225            175
                                                     _______        _______
Net Interest Income After
  Provision for Loan Losses                          $ 8,106        $ 7,596

OTHER INCOME
Service charges on deposit accounts                  $   645        $   508
Other non-interest income                                485            506
Investment securities gains
  (losses) net                                           173             89
                                                     _______        _______
  Total Other Income                                 $ 1,303        $ 1,103

OTHER EXPENSES
Salaries and employee benefits                       $ 2,501        $ 2,110
Net occupancy and fixed asset expense                    717            707
Other non-interest expense                             1,378          1,221
                                                     _______        _______
  Total Other Expenses                               $ 4,596        $ 4,038

Income before income taxes                           $ 4,813        $ 4,661
Applicable income tax (benefit)                          935          1,003
                                                     _______        _______
Net Income                                           $ 3,878        $ 3,658

Net Income Per Weighted Share
  Outstanding                                        $  1.35        $  1.25



See Accompanying Notes to Financial Statements


</TABLE>


                                  3


<PAGE>

<TABLE>

                      FIRST KEYSTONE CORPORATION
                       STATEMENTS OF CASH FLOWS
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                              (Unaudited)

<CAPTION>
(Amounts in thousands)
                                                  1999          1998
<S>                                          <C>            <C>
OPERATING ACTIVITIES
Net income                                          $  3,878       $  3,658
Adjustments to reconcile net
  income to net cash provided
  by operating activities:
  Provision for loan losses                              225            175
  Provision for depreciation and
    amortization                                         301            268
  Premium amortization on investment
    securities                                           197            190
  Discount accretion on investment
    securities                                          (142)          (103)
  Gain on sale of mortgage loans                          (9)           (91)
  Proceeds from sale of mortgage loans                 4,016          4,335
  Originations of mortgage loans for
    resale                                            (6,341)        (5,059)
  (Gain) loss on sales of investment
    securities                                           (77)           (89)
  Deferred income tax (benefit)                          (44)            37
  (Increase) decrease in interest
    receivable and other assets                         (452)          (407)
  Increase (decrease) in interest
    payable, accrued expenses and
    other liabilities                                    251           (415)
                                                    ________       ________
  Net Cash Provided by Operating
    Activities                                      $  1,803       $  2,499

INVESTING ACTIVITIES
  Purchases of investment securities
    available-for-sale                              $(55,358)      $(43,896)
  Proceeds from sales of investment
    securities available for sale                     24,124          8,726
  Proceeds from maturities and
    redemptions of investment
    securities available for sale                     12,942         10,645
  Purchase of investment securities
    held-to-maturity                                       0           (677)
  Proceeds from maturities and
    redemption of investment
    securities held to maturity                        1,858          2,579
  Net (increase) decrease in loans                   (16,781)          (570)
  Purchase of premises and equipment                    (431)          (403)
                                                    ________       ________
  Net Cash Used by Investing
    Activities                                      $(33,646)      $(23,596)

FINANCING ACTIVITIES
  Net increase (decrease) in
    deposits                                        $  2,885       $ 17,208
  Net increase (decrease) in
    short-term borrowings                             23,789          1,365
  Net increase (decrease) in
    long-term borrowings                               9,000          7,000
  Acquisition of treasury stock                       (1,906)          (297)
  Cash dividends                                      (1,461)        (1,231)
                                                    ________       ________
  Net Cash Provided by Financing
    Activities                                      $ 32,307       $ 24,045

Increase (Decrease) in Cash and
    Cash Equivalent                                 $    464       $  2,948
Cash and Cash Equivalents, Beginning                   7,055         13,484
                                                    ________       ________
Cash and Cash Equivalents, Ending                   $  7,519       $ 16,432

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION
  Cash paid during period for
    Interest                                        $  8,707       $  7,621
    Income Taxes                                         923          1,019


See Accompanying Notes to Financial Statements


</TABLE>


                                  4


<PAGE>

                      FIRST KEYSTONE CORPORATION
              CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                          September 30, 1999
                              (Unaudited)

Note 1.

     The accounting and reporting policies of First Keystone
Corporation and Subsidiary conform to generally accepted accounting
principles and to general practices within the banking industry.
These consolidated interim financial statements include the accounts
of First Keystone Corporation and its wholly owned subsidiary, The
First National Bank of Berwick.  All significant inter-company
balances have been eliminated.


Note 2.

     The accompanying consolidated interim financial statements are
unaudited.  In management's opinion, the consolidated interim
financial statements reflect a fair presentation of the consolidated
financial position of First Keystone Corporation and Subsidiary, and
the results of their operations and their cash flows for the interim
periods presented.  Further, the consolidated interim financial
statements reflect all adjustments, which are in the opinion of
management, necessary to present fairly the consolidated financial
condition and consolidated results of operations and cash flows for
the interim period presented and that all such adjustments to the
consolidated financial statements are of a normal recurring nature.


Note 3.

     The results of operations for the nine-month period ended
September 30, 1999, are not necessarily indicative of the results to
be expected for the full year.


Note 4.

     Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share, requires dual presentation of basic and diluted
earnings per share.  Basic earnings per share is calculated by
dividing net income by the weighted average number of shares of common
stock outstanding at the end of each period.  Diluted earnings per
share is calculated by increasing the denominator for the assumed
conversion of all potentially dilutive securities.  The Corporation's
dilutive securities are limited to stock options which currently have
no effect on earnings per share.


Note 5.

LOANS
     Loans are stated at their outstanding principal balances, net of
any deferred fees or costs, unearned income, and the allowance for
loan losses.  Interest on installment loans is recognized as income
over the term of each loan, generally, by the "actuarial method".
Interest on other loans is primarily recognized based upon the
principal amount outstanding.  Loan origination fees and certain
direct loan origination costs have been deferred and the net amount
amortized using the interest method over the contractual life of the
related loans as an interest yield adjustment.


                                  5


<PAGE>

     Non-Accrual Loans - Generally, a loan (including a loan impaired
under Statement of Financial Accounting Standards No. 114) is
classified as non-accrual, and the accrual of interest on such a loan
is discontinued when the contractual payment of principal or interest
has become 90 days past due or management has serious doubts about
further collectibility of principal or interest, even though the loan
currently is performing.  A loan may remain on accrual status if it is
in the process of collection and is either guaranteed or well secured.
When a loan is placed on non-accrual status, unpaid interest credited
to income in the current year is reversed and unpaid interest accrued
in prior years is charged against the allowance for credit losses.
Potential problem loans are identified by management as a part of its
loan review process.

     Income recognition is in accordance with Statement of Financial
Accounting Standards No. 118.  Certain non-accrual loans may continue
to perform, that is, payments are still being received.  Generally,
the payments are applied to principal.  These loans remain under
constant scrutiny and if performance continues, interest income may be
recorded on a cash basis based on management's judgement as to
collectibility of principal.

     Allowance for Loan Losses - The allowance for loan losses is
established through provisions for loan losses charged against income.
Loans deemed to be uncollectible are charged against the allowance for
loan losses, and subsequent recoveries, if any, are credited to the
allowance.

     The Corporation adheres to the principles provided by Statement
of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan as amended by Statement of Financial
Accounting Standards No. 118, "Accounting by creditors for Impairment
of a Loan - Income Recognition and Disclosure."  Under these
standards, the allowance for loan losses related to loans that are
identified for evaluation in accordance with Statement No. 114 is
based on discounted cash flows using the loan's initial effective
interest rate or the fair value of the collateral for certain
collateral dependent loans.  Statement No. 118 allows the continued
use of existing methods for income recognition on impaired loans and
amends disclosure requirements to require information about the
recorded investment in certain impaired loans and related income
recognition on those loans.  The allowance for loan losses is
maintained at a level by management to be adequate to absorb estimated
potential loan losses.  Management's periodic evaluation of the
adequacy of the allowance for loan losses is based on the
Corporation's past loan experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability
to repay (including the timing of future payments), the estimated
value of any underlying collateral, composition of the loan portfolio,
current economic conditions, and other relevant factors.  this
evaluation is inherently subjective as it requires material estimates,
including the amounts and timing of future cash flows expected to be
received on impaired loans that may be susceptible to significant
change.


<TABLE>
<CAPTION>
     The following table presents the changes in the allowance for
credit losses:

(Amounts in thousands)

<S>                                                   <C>
Balance at January 1, 1999                              $2,421
Provisions charged to operations                           225
Loans charged off                                         (154)
Recoveries                                                  80
                                                        ______
Balance at September 30, 1999                           $2,572

</TABLE>

     At September 30, 1999, the recorded investment in loans that are
considered to be impaired under Statement No. 114 was $70,482.  No
additional charge to operations is required since the total allowance
for loan losses is estimated by management to be adequate to provide
for the loan loss allowance under Statement No. 114 as well as any
other potential loan losses.


                                  6


<PAGE>

Note 6.

<TABLE>
<CAPTION>
(Amounts in thousands except Common Shares data)

                                         Common          Common
                                         Shares         Stock        Surplus

<S>                                  <C>               <C>          <C>
Balance at January 1, 1999                2,933,727         5,867        9,761

Comprehensive Income:
  Net Income
  Other comprehensive
    income (loss), net of tax
  Change in unrealized
    gain (loss) on
    investment securities
    available for sale
  Total Comprehensive
    income (loss)
Cash dividends -
  $.51 per share
Purchase of 64,866 shares
  of Treasury Stock
                                          _________         _____        _____
Balance at September 30, 1999             2,933,727         5,867        9,761



<CAPTION>
(Amounts in thousands except Common Shares data)

                                     Compre-                    Accumulated
                                     hensive                       Other
                                     Income         Retained   Comprehensive
                                     (Loss)         Earnings   Income (Loss)
<S>                               <C>            <C>           <C>
Balance at January 1, 1999                            17,123         2,193

Comprehensive Income:
  Net Income                            3,878          3,878
  Other comprehensive
    income (loss), net of tax
  Change in unrealized
    gain (loss) on
    investment securities
    available for sale                 (4,307)                      (4,307)
  Total Comprehensive                  ______
    income (loss)                        (429)
Cash dividends -
  $.51 per share                                      (1,461)
Purchase of 64,866 shares
  of Treasury Stock
                                                      ______        ______
Balance at September 30, 1999                         19,540        (2,114)



<CAPTION>
(Amounts in thousands except Common Shares data)

                                                Treasury
                                                  Stock         Total
<S>                                           <C>            <C>
Balance at January 1, 1999                         (1,191)        33,753

Comprehensive Income:
  Net Income                                                       3,878
  Other comprehensive
     income (loss), net of tax
  Change in unrealized
    gain (loss) on
    investment securities
    available for sale                                            (4,307)
  Total Comprehensive
     income (loss)
Cash dividends -
   $.51 per share                                                 (1,461)
Purchase of 64,866 shares
   of Treasury Stock                               (1,906)        (1,906)
                                                   ______         ______
Balance at September 30, 1999                      (3,097)        29,957


</TABLE>


Note 7.

     As required on January 1, 1996, the Corporation adopted Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of."  The Statement requires that
long-lived assets and certain identifiable intangibles are classified
into two categories for the purpose of accounting for an impairment of
assets:  those to be held and used and those to be disposed of.
Assets to be held and used must be reviewed whenever events or changes
in circumstances indicate that the carrying value may not be
recoverable.  An impairment loss is indicated if the sum of the
expected future cash flows, undiscounted and without interest charges,
is less than the carrying amount of the assets.  An impairment loss
must be recognized as the amount by which the carrying amount of the
asset exceeds the fair value of the asset so determined.
Implementation of this Statement did not have any effect on the
consolidated financial condition or results of operations of the
Corporation.


Note 8.

     The consolidated interim financial statements have been prepared
in accordance with requirements of Form 10-Q and therefore does not
include all the disclosures normally required by generally accepted
accounting principles, or those normally made in the Corporation's
annual 10-K filing.  The reader of these consolidated interim
financial statements may wish to refer to the Corporation's annual
report or Form 10-K for the period ended December 31, 1998, filed with
the Securities and Exchange Commission.


                                  7


<PAGE>

Item 2.  First Keystone Corporation Management's Discussion and
         Analysis of Financial Condition and Results of Operation
         as of September 30, 1999




RESULTS OF OPERATIONS

     First Keystone Corporation realized earnings for the third
quarter of 1999 of $1,355,000, an increase of $86,000, or 6.8% over
the third quarter of 1998.  Nine months net income for the period
ended September 30, 1999, amounted to $3,878,000, an increase of 6.0%
over the $3,658,000 net income reported September 30, 1998.  On a per
share basis net income per share increased to $1.35 for the nine
months of 1999 compared to $1.25 for the first nine months of 1998,
while dividends increased to $.51 per share up from $.42 in 1998, an
increase of 21.4%.

     Year-to-date net income annualized amounts to a return on average
common equity of 15.79% and a return on assets of 1.59%.  For the nine
months ended September 30, 1998, these measures were 14.81% and 1.74%,
respectively on an annualized basis.


NET INTEREST INCOME

     The major source of operating income for the Corporation is net
interest income, defined as interest income less interest expense.  In
the third quarter of 1999 and year-to-date in 1999, interest income
has increased more than interest expense resulting in improved net
interest income.  In the third quarter of 1999, interest income
amounted to $5,900,000, an increase of $674,000 or 12.9% over the
third quarter of 1998.  Interest expense amounted to $3,030,000 in the
third quarter of 1999, an increase of $417,000, or 16.0% over the
third quarter of 1998.  Accordingly, net interest income amounted to
$2,870,000 in the third quarter of 1999, an increase of $257,000, or
9.8% over the third quarter of 1998.  Year-to-date for the nine months
ended September 30, 1999, total interest income increased $1,739,000,
or 11.3% over the first nine months of 1998.  Total interest expense
increased $1,179,000, or 15.5% for the first nine months of 1999 over
1998.  This resulted in net interest income increasing $560,000, or
7.2% for the nine months ended September 30, 1999, over 1998.

     Our net interest margin for the quarter ended September 30, 1999,
was 3.91% compared to 4.17% for the quarter ended September 30, 1998.
For the nine months ended September 30, 1999, our net interest margin
was 3.98% compared to 4.27% for the first nine months of 1998.


PROVISION FOR LOAN LOSSES

     The provision for loan losses for the quarter ended September 30,
1999, was $50,000 compared to $50,000 for the third quarter of 1998.
Year-to-date, the provision for loan losses amounts to $225,000 in
1999 as compared to the $175,000 provision for the period ended
September 30, 1998.  The provision for possible loan losses increased
in 1999 as loan demand continued to be strong.  Our allowance for loan
losses of $2,572,000 as of September 30, 1999, compared favorably to
our allowance for loan losses of $2,421,000 as of December 31, 1998.
Net charge-offs totaled $74,000 for the nine months ended September
30, 1999, as compared to $176,000 for the first nine months of 1998.

     The allowance for loan losses as a percentage of loans, net of
unearned interest was 1.42% as of September 30, 1999, and 1.50% as of
December 30, 1998.


                                  8


<PAGE>

NON-INTEREST INCOME

     Total non-interest or other income was $461,000 for the quarter
ended September 30, 1999, as compared to $427,000 for the quarter
ended September 30, 1998.  Excluding investment security gains and
losses, non-interest income was $384,000 for the third quarter of
1999, a decrease of $14,000 over the third quarter of 1998.  For the
nine months ended September 30, 1999, total non-interest income was
$1,303,000, an increase of $200,000, or 18.1% over the first nine
months of 1998.  An increase in security gains, largely from the sale
of equity securities, plus an increase in service charges on deposit
accounts, resulted in the $200,000 increase in non-interest income
year-to-date in 1999.


NON-INTEREST EXPENSES

     Total non-interest, or other expenses, was $1,588,000 for the
quarter ended September 30, 1999, as compared to $1,379,000 for the
quarter ended September 30, 1998.  The increase of $209,000 is
comprised of salary and benefits increasing $174,000, occupancy
expense decreasing $22,000, and other non-interest expense increasing
$57,000.

     For the nine months ended September 30, 1999, total non-interest
expense was $4,596,000, an increase of $558,000, or 13.8% over the
first nine months of 1998.  Expenses associated with employee expense
and benefits continues to be the largest category of non-interest
expenses.  Salaries and benefits amount to 54.4% of total non-interest
expense for the nine months ended September 30, 1999, as compared to
52.3% for the first nine months of 1998.  Salaries and benefits
amounted to $2,501,000 for the nine months ended September 30, 1999,
an increase of $391,000, or 18.5% over the first nine months of 1998.
The increase was a result of normal salary adjustments, higher
employee benefit costs and an increased number of employees.  Net
occupancy expense amounted to $717,000 for the nine months ended
September 30, 1999, an increase of $10,000, or 1.4% over 1998.  Other
non-interest expenses amounted to $1,378,000 for the nine months ended
September 30, 1999, an increase of $157,000, or 12.9% over the first
nine months of 1998.  Even though our non-interest expenses have
increased more than historic averages, our overall non-interest
expense of less than 2% of average assets on an annualized basis for
1999 and 1998, places us among the leaders of our peer financial
institutions at controlling total non-interest expense.


INCOME TAXES

     Effective tax planning has helped produce favorable net income.
The effective total income tax rate was 20.0% for the third quarter of
1999 as compared to 21.2% for the third quarter of 1998.  For the nine
months ended September 30, 1999, our tax liability amounted to
$935,000, a decrease of $68,000 over 1998.  Our effective tax rate of
19.4% as of September 30, 1999, compared to an effective tax rate of
21.5% for the first nine months of 1998.


ANALYSIS OF FINANCIAL CONDITION

ASSETS

     Total assets increased to $334,284,000 as of September 30, 1999,
an increase of $31,256,000, or 10.3% over year-end 1998.  Total
deposits increased to $249,976,000 as of September 30, 1999, an
increase of $2,885,000, or 1.2% over year-end 1998.

   The Corporation used borrowed funds to support asset growth not
provided by deposit growth.  Short-term borrowings increased to
$30,423,000, an increase of $23,789,000 over December 31, 1998.  The
increase in short-term borrowings was the result of an increase in
securities sold under an agreement to repurchase for a cash


                                  9


<PAGE>

management account.  Long-term borrowings also increased to
$22,000,000 as of September 30, 1999, an increase of $9,000,000 over
year-end 1998.


EARNING ASSETS

     Our primary earning asset, loans, net of unearned income
increased to $180,574,000 as of September 30, 1998, up $19,042,000, or
11.8% since year-end 1998.  The loan portfolio is well diversified and
increases in the portfolio have been primarily from increased
originations of residential real estate loans and commercial real
estate loans.

     In addition to loans, our investment portfolio, another earning
asset, increased in size from December 31, 1998, to September 30,
1999.  Held-to-maturity securities amounted to $12,078,000 as of
September 30, 1999, a decrease of $1,907,000 since year-end 1998.
However, available-for-sale securities increased to $128,523,000 as of
September 30, 1999, an increase of $11,822,000, or 10.1% from year-end
1998.


ALLOWANCE FOR LOAN LOSSES

     Management performs a quarterly analysis to determine the
adequacy of the allowance for loan losses.  The methodology in
determining adequacy incorporates specific and general allocations
together with a risk/loss analysis on various segments of the
portfolio according to an internal loan review process.  Management
maintains its loan review and loan classification standards consistent
with those of its regulatory supervisory authority.  Management feels,
considering the conservative portfolio composition, which is largely
composed of small retail loans (mortgages and installments) with
minimal classified assets, low delinquencies, and favorable loss
history, that the allowance for loan loss is adequate to cover
foreseeable future losses.

     Any loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention that have not been disclosed under
Industry Guide 3 do not (i) represent or result from trends or
uncertainties which management reasonably expects will materially
impact future operating results, liquidity, or capital resources, or
(ii) represent material credits about which management is aware of any
information which causes management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.

     The company was required to adopt Financial Accounting Standards
Board Statement No. 114, "Accounting by Creditors for Impairment of a
Loan" - Refer to Note 5 above for details.


NON-PERFORMING ASSETS

     Non-performing assets consist of non-accrual and restructured
loans, other real estate and foreclosed assets, together with the
loans past-due 90 days or more and still accruing.  As of September
30, 1999, total non-performing assets were $826,101 as compared to
$881,000 on December 31, 1998.  Non-performing assets to total loans
and foreclosed assets was .46% as of September 30, 1999, and .55% as
of December 31, 1998.

     Interest income received on non-performing loans as of September
30, 1999, was $6,131 compared to $5,610 as of December 31, 1998.
Interest income, which would have been recorded on these loans under
the original terms as of September 30, 1999, and December 31, 1998,
was $62,445 and $96,245, respectively.  As of September 30, 1999 and
December 31, 1998, there was no outstanding commitments to advance
additional funds with respect to these non-performing loans.


                                  10


<PAGE>

DEPOSITS AND OTHER BORROWED FUNDS

     As indicated previously, deposit growth amounted to $2,885,000 as
total deposits increased to $249,976,000 as of September 30, 1999, up
from $247,091,000 as of year-end 1998.  During 1999, the Corporation
has experienced deposit growth in only interest bearing deposits.


CAPITAL STRENGTH

     Normal increases in capital are generated by net income, less
cash dividends paid out.  Also, net unrealized gains or losses on
investment securities available-for-sale decreased shareholders'
equity, or capital by $2,114,000 as of September 30, 1999, and
increased capital by $2,193,000 as of December 31, 1998.  Our stock
repurchase plan has repurchased 100,000 shares and 35,134 shares as of
September 30, 1999 and December 31, 1998, respectively.  This had an
effect of our reducing our total stockholders' equity by $3,097,000
and $1,191,000 as of September 30, 1999 and December 31, 1998,
respectively.

     Leverage ratio and risk based capital ratios remain very strong.
As of September 30, 1999, our leverage ratio was 9.65% compared to
10.50% as of December 31, 1998.  In addition, Tier I risk based
capital and total risk based capital ratio as of September 30, 1999,
were 16.43% and 17.86%, respectively.  The same ratios as of December
31, 1998, were 18.62% and 20.11%, respectively.


LIQUIDITY

     The liquidity position of the Corporation remains adequate to
meet customer loan demand and deposit fluctuation.  Managing liquidity
remains an important segment of asset liability management.  Our
overall liquidity position is maintained by an active asset liability
management committee.

     Management feels its current liquidity position is satisfactorily
given a very stable core deposit base which has increased annually.
Secondly, our loan payments and principal paydowns on our mortgage
backed securities provide a steady source of funds.  Also, short-term
investments and maturing investment securities represent additional
sources of liquidity.  Finally, short-term borrowings are readily
accessible at the Federal Reserve Bank discount window, Atlantic
Central Bankers Bank, or the Federal Home Loan Bank.


YEAR 2000 COMPLIANCE

     Management has completed its assessment of all business processes
that could be affected by the Year 2000 issue.  Each business process
assessment included a review of the information systems used in that
process, including related hardware and software, the involvement of
any third parties, and any affected operating equipment.  The mission
critical systems determined to be critical for supporting the core
services offered by First Keystone Corporation have been remediated,
unit tested, and returned to production. Management has completed the
remediation and testing of all affected systems within the critical
business processes by the end of the second quarter of 1999.

     The Corporation anticipates that its total Year 2000 project cost
will not exceed $100,000. This estimated project cost is based upon
currently available information and includes expenses paid to date.
The expenses for maintenance or modification of software associated
with the Year 2000 will be expensed as incurred. The costs of new
software will be capitalized and amortized over the software's useful
life. The aforementioned Year 2000 project cost estimate also may
change as the Corporation progresses in its Year 2000 program and
obtains additional information associated with and conducts further
testing concerning third parties. At this time, no significant
projects have been delayed as a result of the Corporation's Year 2000
effort.


                                  11


<PAGE>

     Management believes it has an effective plan in place to resolve
the Year 2000 issue in a timely manner and, thus far, activities have
tracked in accordance with the original plan. Management has in place
a business continuity plan and has developed contingency plans to
address potential risks in the event of Year 2000 failures, including
non-compliance by third parties. Despite First Keystone Corporation's
efforts to date to remediate affected systems and develop contingency
plans for potential risks, management has not yet completed all
activities associated with resolving its Year 2000 issues. In
addition, non-compliance by third parties (including loan customers)
and disruptions to the economy in general resulting from Year 2000
issues could also have a negative impact of undeterminable magnitude
on First Keystone Corporation.


                                  12

<PAGE>

                      PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings

              None.


     Item 2.  Changes in Securities

              None.


     Item 3.  Defaults Upon Senior Securities

              None.


     Item 4.  Submission of Matters to a Vote of Security Holders

              Annual Meeting of Shareholders of First Keystone
              Corporation held on Tuesday, April 20, 1999, at
              10:00 a.m.

<TABLE>
<CAPTION>
                                                     Votes        Votes
Directors Elected                  Votes For        Against      Withheld
<S>                            <C>              <C>             <C>
John L. Coates                 2,378,426        34,118          0
Dudley P. Cooley               2,385,107        27,437          0
Stanley E. Oberrender          2,385,207        27,337          0


<CAPTION>
                                                Broker
Directors Elected              Abstentions      Non-Votes
<S>                            <C>              <C>
John L. Coates                 0                0
Dudley P. Cooley               0                0
Stanley E. Oberrender          0                0


</TABLE>


Directors Continuing:

John E. Arndt, term expires in 2001
J. Gerald Bazewicz, term expires in 2001
Budd L. Beyer, term expires in 2000
Robert E. Bull, term expires in 2001
Frederick E. Crispin, term expires in 2000
Jerome F. Fabian, term expires in 2000
Robert E. Wise, term expires in 2000


Matters Voted Upon:

Selection of J. H. Williams & Co., as auditors for the Corporation.
Votes For        -  2,387,481
Votes Against    -  798
Votes Withheld   -  0
Abstentions      -  24,265
Broker Non-Votes -  0


     Item 5.  Other Information

              None.


                                  13


<PAGE>

     Item 6.  Exhibits and Reports on Form 8-K

              (a)  Exhibits required by Item 601 Regulation S-K


Exhibit Number         Description of Exhibit

    3(i)               Articles of Incorporation, as amended
                       (Incorporated by reference to Exhibit 3(i) to
                       Registrant's Form 10Q for the Quarter Ended
                       June 30, 1998 and Exhibit 3(i) to Registrant's
                       Annual Report on Form 10-KSB for the year ended
                       December 31, 1996.)

    3(ii)              Bylaws, as amended (Incorporated by reference
                       to Exhibit 3(ii) to Registrant's Annual Report
                       on Form 10-KSB for the year ended
                       December 31, 1996.)

    10                 Material Contracts (Incorporated by reference
                       to Exhibit 10 to Registrant's Form 10Q for the
                       quarter ended June 30, 1997)

    11                 Statement RE:  Computation of Earnings Per
                       Share.

    27                 Financial Data Schedule.


              (b)  The Registrant has filed no reports on Form 8-K for
                   this quarter.


                                  14


<PAGE>

                      FIRST KEYSTONE CORPORATION

                              SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly cause this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                              FIRST KEYSTONE CORPORATION
                              Registrant


November 3, 1999              /s/ J. Gerald Bazewicz
                              J. Gerald Bazewicz
                              President and
                              Chief Executive Officer
                              (Principal Executive Officer)



November 3, 1999              /s/ David R. Saracino
                              David R. Saracino
                              Treasurer/Assistant Secretary
                              (Principal Accounting Officer)


                                  15


<PAGE>

                           INDEX TO EXHIBITS

Exhibit             Description

  10                Material Contracts
                      Profit Sharing Plan Summary (Incorporated by
                      reference to Exhibit 10 (Page 16) to
                      Registrant's Form 10Q for the quarter
                      ended June 30, 1997) Deferred Compensation
                      (Incorporated by reference to Exhibit 10
                      (Page 17) to Registrant's Form 10Q
                      for the quarter ended June 30, 1997)
                        Other Executive Benefits (Incorporated by
                        reference to Exhibit 99 (Page 9) of the
                        Corporation's Annual Report on Form 10-KSB
                        for the year ended December 31, 1996)
                       Management Incentive Compensation Plan
                       (Incorporated by reference to Exhibit 10
                       (Page 18) to Registrant's Form 10Q for
                       the quarter ended June 30, 1997)


  11                Computation of Earnings Per Share

  27                Financial Data Schedule


                                  16